Health Care Reform Slowly Churns in Washington

posted on July 31, 2009

Hello, I'm Mark Pearson. A key government report released on Friday provided the strongest signal yet that the longest recession since World War II appears to be winding down.

According to the Commerce Department, gross national product – the value of all goods and services produced in the U.S. -- declined at an annualized rate of just one percent in the April-to-June quarter. The latest tally comes on the heels of a 6.4 percent drop in the first quarter of 2009, which was the largest decline in nearly three decades.

The GDP report was welcomed on Wall Street where the Dow Jones Industrials gained 17 points on the news.

In its latest snapshot of the economy, the Federal Reserve acknowledged weak economic activity in each of its 12 districts, but the Fed noted most districts indicated the pace of decline has moderated, or that activity has begun to stabilize.

Fed Chairman Ben Bernanke predicts the recession will end later this year. And many analysts think the economy will start to grow again in the third quarter.

But even if the recession ends later this year, job creation typically lags well behind initial economic expansion. And unemployment — which now stands at a 26-year high of 9.5 percent — is expected to surpass the 10 percent mark by the end of the year.

Against that backdrop of rising unemployment and a fragile economic recovery, the Obama Administration continues to press forward with health care reforms. This week though, it became obvious that Congress would not approve an overhaul of the system before lawmakers adjourn for their summer break.

Congressional leaders have spent much of the summer in closed-door meetings hammering out details of potential health care reform. A key group of Senate Finance Committee members have languished over the plan's details for months. Some of the bipartisan group of Senators represent mostly rural states of Iowa, Wyoming, Montana, and North Dakota.

Sen. Kent Conrad, D-North Dakota: "If I had to describe the two or three things that I think are most challenging, one is the affordability question, for people who have insurance offered to them at their place of employment but its insurance they can't afford, that is a significant concern. Second would be Medicaid, and the expansion of Medicaid, and what the reaction of governors will be to additional state requirements."

Democratic Senator Kent Conrad of North Dakota is currently pushing for a cooperative alternative to federal health care insurance. The co-op proposal is modeled after the same principles that guide member-owned credit unions. According to Conrad, regional cooperatives could quickly become the nation's third largest insurer.

The Conrad Co-ops could also appeal to Republicans weary of further government involvement in the American health sector. Iowa Republican Senator Charles Grassley believes co-ops would be well-received in rural America.

Sen. Charles Grassley, R-Iowa: "If we can get bigger private sector insurance groups in the form of Co-ops then that is something I would be on board with. Rural Americans have a long history of making these types of programs work."

But the co-op plan would still require billions in start-up costs paid by taxpayers and opponents argue the proposal would not cover all Americans.

The co-op option does not sit well with liberal members of the Democratic caucus. Many progressive lawmakers like Massachusetts Congressman Barney Frank pledge to vote against any bill that does not include a government-backed public insurance option.

Frank's comments came in response to possible legislative breakthroughs in the U.S. House. A group of conservative Democrats, members of the so-called "Blue Dog Coalition", fought for a less-expensive bill and higher insurance payments for rural hospitals.

Rep. Mike Ross, D-Arkansas: "We protected small businesses, and we ensured that the public option is on a level playing field, it's optional for people, won't be mandated on anybody, and that it's done in a way by demanding that the public option compete with private plans by negotiating rates with providers instead of mandating Medicare rates on providers, saving a lot of rural hospitals across this country."

Despite perceived breakthroughs and an ill-fated Obama Administration deadline, neither Congressional chamber will have a final bill until after the August recess. And the Administration acknowledged this week that a final vote may not come until October.

(Jul 31, 2009)
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